The Gunma Bank, Ltd.

Business Details

The Banking segment, directly operated by Gunma Bank, provides a broad range of financial services to individuals, corporations, and public entities through deposits, lending, securities investment, domestic and foreign exchange, investment trust sales, over-the-counter insurance product sales, trust business, and more. It is the core business, accounting for approximately 85% of consolidated ordinary income, and operates overseas branches (cross-border loans and structured finance) in addition to its domestic branch network. In FY2026 (ending March 2026), ordinary income from external customers was ¥222,643 million, and segment profit was ¥78,828 million.

Recent Overview

With both loan yield increases and balance expansion, Banking segment profit rose sharply by 36.7% year on year

Banking segment profit for FY2026 (ending March 2026) was ¥78,828 million (up ¥21,153 million, or 36.7%, year on year). Against the backdrop of the Bank of Japan's rate hikes, the loan yield rose to 1.46% (up 0.24 percentage points year on year), and the loan balance also expanded to ¥7,226,164 million (up ¥381,052 million from the prior fiscal year-end). Non-consolidated core net business profit (excluding gains/losses on cancellation of investment trusts) reached a record high of ¥65,168 million (up ¥14,622 million year on year). Although the securities balance decreased due to ongoing sales, the securities yield rose to 2.77% (up 0.63 percentage points year on year). Valuation gains/losses on other securities turned from a valuation loss in the prior fiscal year to a valuation gain of ¥0.1 billion. The disclosed claims ratio under the Financial Reconstruction Act improved to 1.14% (from 1.29% at the prior fiscal year-end). Additionally, on March 26, 2026, the company entered into a business integration agreement with Daishi Hokuetsu Financial Group (effective April 1, 2027).

Key Products

Growth Drivers

• Rising loan yield (non-consolidated loan yield of 1.46%, up 0.24 percentage points year on year) and improved total interest margin (0.43%, up 0.17 percentage points year on year) accompanying the Bank of Japan's phased rate hikes
• Continued expansion of the loan balance (non-consolidated ¥7,226,164 million, up ¥381,052 million from the prior fiscal year-end, a 5.6% increase)
• High growth in cross-border loans, structured finance, and overseas branch lending (head-office lending up 29.6% from the prior fiscal year-end; overseas branches up 18.1%)
• Strengthening of non-interest business profit (non-consolidated fees and commissions income of ¥17,891 million, up ¥2,837 million year on year) and expansion of assets in custody balance (consolidated ¥1,487.0 billion, up ¥234.4 billion from the prior fiscal year-end)
• Expansion of investment trust and life insurance sales through strengthened collaboration with Gungin Securities
• Business integration with Daishi Hokuetsu Financial Group (planned for April 2027), forming a top-tier regional bank financial group through scale expansion and cost efficiency

Risks

• Margin compression risk from rising funding costs (non-consolidated interest expense on deposits of ¥25,687 million, up ¥13,173 million year on year)
• Valuation fluctuation risk in the securities portfolio amid rising interest rates (bond valuation gains/losses of negative ¥73.6 billion)
• Possible increase in credit costs (non-consolidated credit costs of ¥3,226 million, up ¥897 million year on year)
• Long-term decline in regional economic activity and loan demand due to population decline and aging
• Integration costs, system integration risk, and personnel attrition risk during the business integration process
• Losses on sales of stocks and other securities associated with the reduction of cross-shareholdings (non-consolidated losses on sales of stocks and other securities of ¥5,871 million, up ¥3,504 million year on year)